Bernanke's Inflated Market

There's not much argument that Ben Bernanke has been one of the more active Federal Reserve Board Chairmen. The "cash injections", covert buys of Treasury Notes, and some rather strange occurrences in the metals markets over the past year, has everyone outside the CNBC cheerleaders wondering if this stock market rally is real. A look at the straight line gain in the S&P 500 since March is reminiscent of the kind of charts convicted hustler Bernie Madeoff used to produce.


The tip-off that the recovery may not be as certain as claimed is found in crude oil prices. Crude oil started its predictable fall in August, but then a strange thing happened; instead of the typical post Labor Day crash, it went back up.


With gold over $1,000/oz., and Treasury bonds selling at auction at a brisk pace, it would seem that everybody is buying everything; Let the good times roll. Except, it can all be explained by a weakening currency.


Rising prices are only the result of reduced buying power of the dollar. If that's not inflation, then what is?

Bernanke Loses Grip On Reality

Federal Reserve Chairman Ben Bernanke made some unbelievably stupid statements before a House panel yesterday.

“Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance.”

Let's take a look at the "confidence of the financial markets" that Mr. Bernanke seeks to maintain. Here's what the confidence in Citigroup looks like:



Here's the confidence in Bank of America:



But wait, somebody's confident in Goldman Sachs:



The company with the inside line to the Treasury Dept. looks to be coming along just fine. I'm becoming increasingly confident that the game is rigged. Here's another pearl of wisdom from the chief:

“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,”

After 2 quarters of -6% GDP, and trillions of dollars poured down the toilet that is the financial market, this amounts to a deathbed conversion. Anything short of disassembling the Federal Reserve System, and throwing the bankers into debtor's prison, won't restore financial stability. Unfortunately, few of our leaders are set to "begin planning" for that.

Charts courtesy of bigcharts.com